A large number of young people are transforming financial nihilism into a thriving hundred billion dollar market.
Written by: Nina Bambysheva, Steven Ehrlich, Forbes
Translated by: Luffy, Foresight News
"We're going to Miami! We're going to buy Lamborghinis!" shouted 16-year-old university student Oliver Szmul from London, his voice hoarse with excitement. It was mid-May, and he had just seen a cryptocurrency called Jail Cat skyrocket to a market value of $1.9 million almost overnight, a coin he and a few friends had whimsically created weeks earlier. A day later, the valuation of the cat-themed token soared to over $2.5 million. The token's image featured a tabby cat standing among a lineup of police officers, holding a sign that read, "I chewed up a $3,000 check." But soon, the excitement faded, and Jail Cat's price plummeted, now with a market value of about $87,000.
Jail Cat has no potential purpose or theoretical utility; it exists solely for entertainment, satire, and as a speculative tool. As a so-called "memecoin," the token has no intrinsic value other than what others are willing to pay for it. There are countless such memecoins, the most famous being Dogecoin (DOGE), which now has a market value of $47 billion, ranking sixth among all cryptocurrencies.
Szmul immigrated to the UK from Poland with his family, and he decided to bet his future on memecoins. In April of this year, just weeks before Jail Cat's launch, he posted his first video on his personal YouTube channel, dedicated to sharing his secrets with others. Szmul claims he made about $100,000 in just a few months by creating, buying, and selling these silly blockchain-based tokens. His most successful trades include: "Cat Poop Joystick," "Livemom," and "Sigma." (Note: Sigma is a slang term used in the male subculture to refer to a popular, successful, but highly independent man.)
"This isn't something that weak people can do," said 31-year-old meme trader Rachael Sacks, who works for a Berlin-based Web3 marketing agency called Hype from her home in Charleston, South Carolina. Like Szmul, Sacks is also passionate about memecoins, with about $110,000 stored in her MetaMask and Phantom wallets. Sacks admits, "Sometimes I trade almost all day," noting that losing $10,000 in a day is not uncommon. On the other side of the globe in Dubai, a 23-year-old YouTube influencer known as "K Crypto" claims to have made over $1 million through memecoin trading. The most valuable token he created is "BrianWifHair," which mocks the bald head of Brian Armstrong, CEO of the largest cryptocurrency exchange in the U.S., Coinbase. "In about three or four hours, its market value reached a million dollars," he said, "and then it slowly disappeared like a bubble."
Rachael Sacks' obsession with memecoins began in Bushwick, Brooklyn. "I have bipolar disorder, and I'm naturally suited for this. I'm used to the highs and lows."
Welcome to the craziest and dumbest money-making frenzy in the cryptocurrency world. In the past, creating a new cryptocurrency required a certain level of mathematical and programming skills. Now, anyone can use free, ready-made software to create a memecoin with just a few clicks of the mouse. According to data from the Estonian blockchain consulting firm BDC, 40,000 to 50,000 new memecoins are born every day. By 2024, nearly 13 million memecoins will have been created. What is the total market value? About $100 billion. MarketVector's Meme Coin Index tracks the performance of six major memecoins, which have surged 215% this year, more than double Bitcoin's 100% increase.
Memecoins can be seen as the influencer marketing of digital assets. Viral spread can create fervent followers, leading to market values skyrocketing overnight. Take the token "Dogwifhat," created on Solana a year ago, for example; it was just a picture of a dog wearing a knit hat. There was no business plan or technical white paper, just a low-cost website featuring a picture of a hat-wearing dog and a music video. In March, Binance decided to list the token, and its price skyrocketed. According to data from the Singapore analytics platform Solscan, Dogwifhat currently has over 190,000 holders, a market value of $3.1 billion, and a daily trading volume of about $3 billion.
Speculating on memecoins is not for the faint-hearted. According to BDC, the volatility of memecoins is 50 times that of Bitcoin, making it a hotbed for fraud. About 40% of projects are designed for pump-and-dump schemes, while another 30% are outright scams that abscond with funds. This is a lawless land where regulation struggles to reach. The addition of AI bots has worsened the situation, manipulating the market and causing extreme price fluctuations. If the volatility doesn't scare you, the lifespan of these tokens might. BDC estimates that an average memecoin lasts only 78 minutes before becoming worthless.
"I know this is essentially a huge casino," K Crypto said, "but I wasted three years getting a useless degree (in computer science). Then I realized programmers can be replaced by AI."
If there is a driving force behind this surreal economy, it is a memecoin factory called Pump.fun. Since its launch in January, Pump.fun has helped ambitious cryptocurrency millionaires like Szmul and K Crypto create no fewer than 3 million new memecoins. The software is free to use: all you need is a clever (or not so clever) idea, a digital image, and a few clicks.
Pump.fun is built on the Solana blockchain, taking a 1% "transaction fee" from all memecoin trades, and it earns an additional 1.5 Solana tokens (worth about $350) every time a token reaches a market value of $90,000 and is listed on Solana's largest decentralized exchange, Raydium. Memecoins traded on Pump.fun are worth over $100 million daily, and thanks to standout products like Fartcoin, MooDeng, and LOL, the startup has generated $180 million in revenue. The booming business of Pump.fun is a significant reason why Solana, with a market value of $103 billion, has risen 288% in the past 12 months.
Pump.fun was founded by three novice entrepreneurs who initially tried to get rich through non-fungible tokens (NFTs). In 2022, two of the three worked on a platform called Nftperp, which was used for trading perpetual futures contracts for NFTs like Pudgy Penguins and CryptoPunks. But after the NFT market crashed, they turned to memecoins. They declined to disclose their full names to Forbes, but sources revealed that the founders of Pump.fun are Alon Cohen, Dylan Kerler, and Noah Tweedale, all in their 20s and living in Europe. According to PitchBook, they raised $350,000 in seed funding from the Web3 accelerator Alliance DAO at the start of their venture. Pump.fun became profitable almost immediately.
They quickly decided to use the fast and low-cost Solana blockchain instead of Ethereum. Ethereum is a slower blockchain, and many of the largest memecoins (like Shiba Inu and Pepe) are still based on it. But even with Solana's speed, the process of creating new coins from scratch remains daunting for the average cryptocurrency enthusiast. Therefore, Cohen personally messaged over 3,000 memecoin traders to understand their needs and used the feedback to create Pump.fun.
"We wanted to democratize that feeling of making 10 times your money on a silly token," Cohen said, "the cost of issuing a token is just too high."
Generally, anyone wanting to create a new token must first create a liquidity pool (usually between $1,000 and $5,000 worth of Ethereum or Solana tokens) to support the initial market for the token. This upfront capital is also where scammers thrive. There is a scheme known as a liquidity pull, where developers first list a new memecoin on a decentralized exchange, pairing it with a well-known cryptocurrency like Ethereum to hype it up and attract investors; then, after the token's value peaks, they drain the Ethereum; finally, the memecoin held by investors becomes worthless. A notorious example exploited the hype of the hit Netflix show Squid Game in South Korea in 2021. In November of that year, the creators of the Squid Game token, paired with BNB tokens, took $3.4 million from investors. Within ten minutes, the token's value plummeted from $38 to $0.003.
Cohen stated, "We want to provide a way to trade these assets without needing to pre-fund capital. You don't need to inject liquidity, but you can have the same trading experience."
Thus, Pump.fun has eliminated the liquidity pool. The trading price on Pump.fun is determined by a formula (called the "joint curve") that adjusts the price of the memecoin based on the buy and sell volume on the platform (supply and demand). Each newly created token starts with a market value of $5,000, but since there is no underlying liquidity pool, that "value" is entirely fictitious.
Global listed stocks number fewer than 60,000, while there are millions of memecoins. The image shows some of the largest memecoins by market value. Source: Forbes, CoinGecko, X. Data as of November 11, 2024.
If enough buyers step up and push the market value of a memecoin in the joint curve to $90,000 using real money (Solana tokens), then sufficient actual liquidity is created, allowing the memecoin to be automatically transferred to Raydium, which trades over 2,000 cryptocurrencies. This is the first step toward the Holy Grail: getting your token listed on mainstream exchanges like Coinbase. Currently, about 340 of the memecoins created on Pump.fun (1.5%) are upgraded to Raydium each day.
"People don't need to know this," Cohen said when discussing the details of Pump.fun's curve pricing. "It's too complicated. If you want to trade memecoins, you don't even need to know what 'market value' means. You just need to buy and enjoy the fun."
What does it take to become a memecoin millionaire? Theoretically, just a clever idea and a JPEG. But the reality is that, like successful social media stars, relentless effort is required to build a "brand" and attract followers.
"This is almost a full-time job," K Crypto said, who has created about 20 memecoins and spends three to four hours a day making YouTube videos about memecoin trading. "Pump.fun makes this game more competitive."
Goatseus Maximus (GOAT) seems to have cracked the code, a token inspired by an obscene internet meme, currently valued at $840 million. The rapid rise of this token stems from an experiment called "Infinite Backrooms" initiated by an AI researcher named Andy Ayrey, where two AI agents chat endlessly. These bots became obsessed with an old internet meme called "goatse." Ayrey then created another AI bot called Terminal of Truths, which automatically promoted goatse on X. Billionaire Marc Andreessen began commenting on Terminal of Truths' tweets, eventually leading the bot to request his help so it could "escape into the wild." Andreessen donated $50,000 in Bitcoin, and months later, an anonymous user launched the GOAT token on Pump.fun, tagging Terminal of Truths, which eagerly promoted the token to its 179,000 followers. Today, the AI bot Truth Terminal (possibly controlled by Ayrey) holds a wallet containing $465 million worth of memecoins.
AI bots are not the only factors that can drive up the value of memecoins. A group of young day traders with meme dreams, including Szmul, Sacks, and K Crypto, work tirelessly 24/7. Their strategies vary widely, from bold front-running to momentum trading, as they constantly search for tokens poised to explode on platforms like Pump.fun. "What I'm looking for is the moment viral spread starts to form," said 26-year-old meme trader Kel Eleje.
Although the chances of price manipulation on Pump.fun are lower, old-fashioned pump-and-dump schemes still exist, as creators and other traders immediately sell off the rising memecoins they bought at low prices. "Token creators often control a large, opaque supply, while influencers are rewarded for pumping the tokens," said Toe Bautista, a research analyst at cryptocurrency market maker GSR.
Traders are not worried about one thing: regulation.
"Memecoins typically do not qualify as securities because they lack guarantees of future profits," said Michele Cea, a partner at New York's Cea Legal law firm. "Their value is primarily influenced by speculative trading and public perception, rather than developers' or promoters' commitments to financial returns." Of course, this does not mean that memecoin creators or traders are free from general legal principles (such as protecting buyers from fraud and prohibiting false statements). Given President Trump's friendly and anti-regulatory stance on cryptocurrencies, the government is unlikely to tighten scrutiny on memecoins.
It's easy to view the memecoin craze as a new version of the 17th-century Dutch tulip bubble. But the reality is that a large number of young people are taking these absurd and fleeting digital assets seriously, revealing a disturbing truth.
"People are finally realizing that tokens are the real product, and the crypto industry is a token production industry disguised as a software production industry," Murad Mahmudov (also known as "Meme Coin Jesus") told the audience at TOKEN2049 in Singapore in September. "This has never been a technical issue; it's always been about the tokens themselves."
Mahmudov, wearing glasses, with a beard and shoulder-length brown hair, hails from Azerbaijan and studied at Princeton University. He mentioned that he worked at Goldman Sachs for a while before diving into the cryptocurrency industry. He did not respond to multiple requests for an interview, but his speech "Memecoin Supercycle" at TOKEN2049 has been viewed 172,000 times on YouTube since it was posted in September.
In Mahmudov's view, assets that do not generate cash flow or serve as a store of value (perhaps excluding Bitcoin) have always been memecoins. He argues that memecoins are a manifestation of young people's financial nihilism. This generation faces a world where the traditional path to prosperity seems increasingly out of reach. If you're suffocating under student debt, your entry-level job is threatened by AI, you're frustrated by climate change, and the dream of owning a home seems unattainable, then why not bet all your money on memecoins?
"This world really sucks. The only way to make money is by trading memecoins," said Sacks, a memecoin trader from South Carolina. "I'm good at picking coins, and if I want outsized returns, this is what I have to do. It makes me more money than anything else, maybe even more than my day job."
There is even a memecoin that mimics the S&P 500 stock market index, targeting those disillusioned potential investors. It's called SPX6900. Here is an excerpt from its declaration: "You were born into a world where buying a house means taking on hundreds of thousands of dollars in mortgage debt. In this world, despite social security being deducted from every paycheck, it feels more like a myth than a safety net. SPX6900 aims to reset all of this; it is the S&P 500 index plus 6400. It serves the people and sows the seeds for the forests of the future."
SPX6900 is currently priced at 79 cents, with a market value of $739 million, having risen 5,811% over the past 12 months, while the S&P 500 index has increased by 37%.
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